Turkish Lira Soars After AK Party Win

Turkey's lira surged with stocks and bonds after the political party President Recep Tayyip Erdogan co-founded swept back into office in the second parliamentary vote this year, ending months of political deadlock.

The lira jumped 3.5 percent to 2.8166 against the dollar at 6:05 p.m. in Istanbul, the biggest advance among more than 150 currencies tracked by Bloomberg globally.

"Although unexpected, AK Party's victory may be the optimal election outcome for near-term economic and asset dynamics in Turkey," Roxana Hulea, a London-based strategist at Societe Generale, said in an e-mailed note.

The AK Party's win heralds the end of a political standstill that began in June, when it lost its majority for the first time since 2002.

In the months that followed, coalition talks between parties collapsed and uncertainty over who would run the $720 billion economy made Turkish assets even more vulnerable to a selloff across emerging markets, pushing the lira to a record low against the dollar and the yield on the government's two year debt to the highest in six years.

Societe Generale SA predicted Monday that the lira will climb a further 3.6 percent to 2.72 per dollar, its 200 day moving average, following the AK Party's victory, while Anadolu bank AS said the currency may appreciate to 2.60 or 2.65.

Ecstrat Ltd., an emerging markets researcher, forecast stocks may rise as much as 15 percent in dollar terms.

About Currency Exchange InternationalCurrency Exchange International (CXI) is a leading provider of foreign currency exchange services in North America for financial institutions, corporations and travelers. Products and services for international travelers include access to buy and sell more than 80 foreign currencies, multi-currency cash passport’s and traveler’s cheques. For financial institutions, our services include the exchange of foreign currencies, international wire transfers, purchase and sale of foreign bank drafts, international traveler’s cheques, and foreign cheque clearing through the use of CXI’s innovative CEIFX web-based FX software www.ceifx.com.